JSW Steel Ltd., India's third- biggest producer, may spend $500 million buying coal mines overseas, securing supplies for its local expansion.

The company is seeking mines in nations including Australia and South Africa, Managing Director Sajjan Jindal said in an interview in Mumbai. JSW Steel plans to secure half of its coal requirement overseas, he said.

JSW Steel is looking at new locations after failing to find coking coal at its exploration project in Mozambique. Prices of steelmaking materials including coking coal and iron ore surged in the past five years because of rising demand from China, the biggest producer of steel.

The company plans to raise capacity by more than a third to 10 million metric tons at its Vijayanagar plant in South India by 2011, Jindal said. Following the expansion, it aims to build a mill in the eastern state of West Bengal with an initial capacity of 3 million tons, he said.